GLOBALIZATION AND INSURANCE DEVELOPMENT: ANY GROWTH NEXUS FOR INSURANCE DEEPENING IN NIGERIA?

Abstract

Modern insurance system derived from marine insurance was a risk sharing device that sustained international trade. Globalization, an off-shoot of international trade should offer bi-directional growth with insurance business. Despite the advances of globalization, insurance penetration in Nigeria seems not responsive to Foreign Direct and Indirect investments. Also, the degree of trade openness, business and market attractiveness is more or less not having any bearing on growth of insurance business. Insurance management’s development and regulation may have further complicated the growth nexus. This study uses Granger causality and VAR to examine the conundrum surrounding the inexplicable level of insurance penetration both in non-life and life insurance in Nigeria in spite of sizeable foreign investment. The study recommends insurance deepening through risk- based regulation, and ensuring fit and proper persons are employed in the insurance industry. There is urgent need to improve business and market attractiveness both for FDI and global players in insurance to enter the Nigerian market.